Regulator urges Eskom to apply for new tariff

Eskom, which has delayed an application for a tariff increase, is in danger of missing a July 1 deadline for any tariff hike to be implemented, the power regulator said.

Mbulelo Ncetezo, the executive director at the power regulator Nersa, said it takes three to four months to process an application, and state-owned Eskom was running out of time.

Should Eskom miss the deadline, the utility may have to wait until next year for any tariff increase to be enforced, or it may have to accept an increase of 34% that has been proposed by the Treasury.

Ncetezo said Nersa had yet to consider Treasury’s proposal.

“The national Treasury sent a note to municipalities in the country saying that they should implement a 34% rise as of July if there is nothing coming from Eskom by then,” he told Reuters late on Tuesday at a power conference in Johannesburg.

“We have told Eskom what the implications would be if they submit their application late,” Ncetezo said.

He said the increase proposed by Treasury was “not far off from what Nersa had indicated last year if you add inflation.”

The power regulator approved a total 27% tariff hike to Eskom last June, and said the electricity prices could rise by between 20% and 25% a year over the next three years.

South Africa’s inflation is at 8,6%.

Speaking at the conference, Eskom chief executive Jacob Maroga said the utility would apply for new tariffs “very soon”, to help pay for new plants to fill a power supply shortfall.

The utility has previously said it has delayed the application to take into account the impact of the financial crisis on consumers, and its own ability to borrow.

Eskom, which provides 95% of power in Africa’s biggest economy, plans to spend $385-billion over the next five years to build new power plants.

It has said it will rely on an increase in electricity tariffs, equity and borrowings to raise the funds. - Reuters